Why this issue is significant
The Intesa Sanpaolo Group attaches great importance to risk management and control as conditions to ensure reliable and sustainable value creation in a context of controlled risk.
Intesa Sanpaolo has a moderate risk profile in which capital adequacy, earnings stability, liquidity and a strong reputation are the key factors to protecting its current and prospective profitability.
The risk management strategy aims to achieve a complete and consistent overview of risks, given both the macroeconomic scenario and the Group’s risk profile, by fostering a culture of risk-awareness and enhancing the transparent and accurate representation of the risk level of the Group’s activities. Such management also includes measurement of the social and environmental variables in lending activities, particularly when our customers’ business projects are implemented in developing countries, for which local regulations do not offer suitable safeguarding clauses, and in “sensitive” sectors, i.e. those for which the external output generated has a greater probability of negative social and environmental impact on the community.
Intesa Sanpaolo has reached a strong capital base and is in a leadership position among the strongest European competitors.
Ready for a change in the economic scenario, the Bank has taken steps to implement latest generation rating models, dedicated to Italian businesses, to measure the sector and competitive variables.
In particular, in order to immediately seize the opportunities arising from potential new economic prospects, a strategic analysis module was implemented to measure the income and financial performance of the business and its competitive position, used by the Group's sales Networks to support the rating assessment for loan disbursement purposes.
As part of the environmental and social risk monitoring in project financing, from 1 January 2014 the application of the Equator Principles was extended beyond the scope of Project Finance activities to include also project-related corporate loans. Later during the year the new Operating Guidelines were drafted and published as corporate policy. To ensure correct use by all the parties involved in the lending processes, a training plan – well-articulated in terms of teaching methods and in the choice of participating departments – was launched.
How it is managed
The Group has implemented specific processes and responsibilities to understand and manage risks in such a way as to ensure long-term solidity and going concern assumptions, extending the benefits to its employees, customers and investors.
The Group sets out these general principles in policies, limits and criteria applied to the various risk categories and business areas with specific risk tolerance sub-thresholds, in a comprehensive framework of governance and control procedures.
The main risk-acceptance strategies are summarised in the Group’s Risk Appetite Framework (RAF), approved by the Management Board and Supervisory Board. The RAF, introduced in 2011 to ensure that risk-acceptance activities remain in line with shareholders’ expectations, is established by taking account of the Intesa Sanpaolo Group’s risk position and the economic situation.
Departments/Functions in charge
The definition of the Risk Appetite Framework and the resulting operating limits for the main specific risks, the use of risk measurement instruments in loan management and operational risk control processes, and the assessment of capital adequacy within the Group represent fundamental milestones in the risk strategy, defined by the Supervisory Board and the Management Board along the Group’s entire decision-making chain, down to the single business units and single desks.
The Supervisory Board carries out its activities through specific internal committees, among which there are the Internal Control Committee and the Risks Committee. The Management Board relies on the action of managerial Committees, including the Group Risk Governance Committee. Both Corporate Bodies receive support from the Chief Risk Officer, who is a member of the Management Board and reports directly to the Chief Executive Officer.
The Corporate Social Responsibility Unit participates in the social and environmental risk assessment processes for loans covered by the scope of application of the Equator Principles.
Performance indicators and objectives achieved
|Indicators||2014 progress status|
|Definition of systematic monitoring to manage Significant Transactions (STs), i.e. transactions with a potentially significant impact on the Group risk profile.||
|Breakdown of Group RAF limits on subsidiaries with a high contribution to risks and/or specific local features.||RAF limits defined as specific to Banca IMI, Intesa Sanpaolo Vita and the International Subsidiary Banks.|
|Overall value of loans granted for projects subjected to Equator Principles screening and percentage of total project finance loans||830 million euro (7.7%)|
|Number of projects under the Equator Principles screening||19|
|Number of specialists trained in Equator Principles and number of training hours||30 specialists 450 training hours|
|Definition of systematic monitoring of reputational risk management and mitigation||
|Extension of the scope of application of the Equator Principles to project-related corporate loans||